I am a practicing attorney with the law firm of Bopp, Coleson & Bostrom in Terre Haute, Indiana. Since 1980, a significant portion of my law practice has involved the representation of not-for-profit corporations and political action committees including the National Right to Life Committee, Inc. and the Christian Coalition, Inc. regarding compliance with the Act. In that connection, I have represented parties in numerous FEC investigations and enforcement actions and in four separate successful law suits which resulted in five separate FEC regulations being struck for violating the First Amendment to the United States Constitution.

Because of my developed expertise in federal election law, I testified in 1996 before this Committee regarding proposed changes in the Act. I testified on behalf of the Free Speech Coalition, a bipartisan coalition of public interest groups co-chaired by Ellie Smeal of the Fund for the Feminist Majority and David Keene of the American Conservative Union. In addition, I have testified on several occasions before the Federal Election Commission regarding proposed FEC regulations. I currently serve as Vice President of the Free Speech and Election Law Practice Group of the Federalist Society.

INTRODUCTION

The proponents of limits on political speech have criticized the administration of the Federal Election Campaign Act because of their belief that the Act unduly limits the power of the FEC to enforce the Act due to the FEC's structure and limits on the FEC's authority. As a result, they advocate that Congress grant wide-ranging additional authority to the FEC to enforce the Act and that Congress appropriate substantially more funds for administration of the Act.

There is no question that the FEC has failed to aggressively deal with undisputed violations of the FEC such as late filing of reports, acceptance of illegal foreign campaign contributions and violations of campaign contribution limits. As a result, transgressions by major political party candidates and parties have received insufficient attention.

The FEC's failure to address serious campaign violation comes not from a lack of authority or funds, but because of distorted priorities resulting from the FEC's effort to circumvent First Amendment limits on the regulation of free political speech of citizens groups contained in the United States Supreme Court decision in Buckley v. Valeo, 424 U.S. 1 (1976).

In this 20 year effort to suppress political speech, the FEC has treated the First Amendment as a loophole in the FECA which it is their duty to close, and the FEC has treated United States Supreme Court decisions against it as an inconveniences to be overcome. As a result, the FEC has engaged is a sustained and unprecedented assault on the First Amendment. That assault has consumed enormous FEC resources. Rather than enforce the many uncontroverial and clearly constitutional provisions of the FECA, the FEC has used its limited resources to launch a series of regulatory changes and enforcement actions with the intent of expanding its powers to regulate free speech. This effort has resulted in a series of court cases striking down these regulations and defeating the FEC's enforcement actions.

The courts have, therefore, frustrated the unlawful efforts of the FEC to impinge on free speech, but at an enormous cost in taxpayer funds and in attorney fees for successful victims of the FEC's enforcement actions. The cost to the free speech of those intimidated by the heavy hand of the FEC, however, cannot be calculated. The FEC is simply out of control and must be reigned in order to prevent further damage to First Amendment interests and in order to refocus the efforts of the FEC toward its legitimate activities.

FEC'S WAR ON THE FIRST AMENDMENT

Serious questions have been raised regarding FEC administration of the Act by non-partisan public-interest groups, by courts, and by commentators. For instance, a major study by the non-partisan Fair Government Foundation found that:

(1) the Federal Election Commission has attempted to arrogate to itself policy-making authority that Congress has not granted to it,

(2) the Federal Election Commission has refused to comply with constitutional limitations on its authority as identified by the United States Supreme Court in such cases as Buckley v. Valeo, and

(3) the Federal Election Commission has shown a shocking indifference to the effect of its regulatory activities on the free speech rights of those potentially subject to its jurisdiction, resulting in a sever chilling effect on constitutionally protected political expression.

Fair Government Foundation, The FEC's Express War on Free Speech (1996).

In fact, the FEC's intransigence in complying with free expression rights after the Supreme Court's decision in Buckley v. Valeo, led Chief Judge Kaufman of the Second Circuit to comment of the FEC, in CLITRIM, 616 F.2d 45, 53-54 (2d Cir. 1980) (Kaufman, Chief Judge, concurring), that

[T]he insensitivity to First Amendment values displayed by the Federal Election Commission (FEC) in proceeding against these defendants compels me to add a few words about what I perceive to be the disturbing legacy of the Federal Election Campaign Act (FEC ),  2 U.S.C. '' 431, et seq. . . . . Indeed , before Buckley v. Valeo . . . the Supreme Court had emphasized that freedom to criticize public officials and oppose or support their continuation in office constitutes the Acentral meaning" of the First Amendment. . . . If speakers are not granted wide latitude to disseminate information without government interference, they will "steer far wider of the unlawful zone," . . . thereby depriving citizens of valuable opinions and information. This danger is especially acute when an official agency of government has been created to scrutinize the content of political expression, for such bureaucracies feed upon speech and almost ineluctably come to view unrestrained expression as a potential "evil" to be tamed, muzzled, or sterilized. . . . The possible inevitability of this institutional tendency, however, renders this abuse of power no less disturbing to those who cherish the First Amendment and the unfettered political process it guarantees. Buckley v. Valeo, supra, imposed upon the FEC the weighty, if not impossible, obligation to exercise its powers in a manner harmonious with a system of free expression. Our decision today should stand as an admonition to the Commission that, at least in this case, it has failed abysmally to meet this awesome responsibility.

Thus, even as early as 1980, the intransigence to the FEC in protecting First Amendment freedoms was obvious.

Unfortunately, the FEC has continued unabated in its efforts to limit protected speech. Instead of enforcing the important and uncontroversial provisions of the Act, the FEC has focused its attention on "grassroots groups and citizens who want to take part in the political debate, too, groups far less well-funded and less capable of extricating themselves from the tangle of FEC regulations." Thus, the FEC has functioned "more and more as a censor of political expression, especially by issue-oriented, grassroots activists." S. Hayward & ".R. Hayward, Gagging on Political Reform, REASON 20 (Oct. 1996), attached as Exhibit B.

CONSTITUTIONAL PROTECTION OF ISSUE ADVOCACY

The principal effort of the FEC in suppressing free speech has focused on prohibiting issue advocacy by not-for-profit groups, unions and political parties. The basis for this misguided effort is the view that "issue advocacy" may influence an election and thus must be brought within the prohibitions of the FECA. The United States Supreme Court, however, has recognized that "issue advocacy" is vital to our representative democracy and must be given a wide birth. As a result, the FEC has lost, on First Amendment grounds, every case it has brought seeking to prohibit citizens groups from discussing the position of candidates on issues.

Lobbying groups, which have been subject to FEC enforcement action, engage in extensive "issue advocacy." "Issue advocacy" is simply discussing issues of public concern. While this usually involves general educational activities of not-for-profit groups, it also involves legislative lobbying and grass roots lobbying, such as the 1993 "Helen and Louise" ad campaign which was credited with turning the tide of public opinion against President Clinton's health care plan. In fact, whenever a person or organization discusses issues of public concern, he or she is involved in "issue advocacy."

For many lobbying groups, grass roots lobbying also includes publishing "scorecards" and "voter guides." "Scorecards" report to the organization's membership on the votes of incumbent members of Congress and rate them on their support for the organization's position on bills. "Voter guides" are distributed to the general public and contain a list of candidates' positions on issues.

By advising potential voters of the positions of candidates on issues, each of these devices is a powerful tool in the effort to persuade Congressmen to vote in accord with the organization's positions on issues. "Issue advocacy," then, is simply a part of "the free discussion of governmental affairs," protected by the First Amendment, upon which our system of democratic representative government depends. Pennekamp v. Florida, 328 U.S. 331, 346 (1946).

The problem, according to the FEC, is that "issue advocacy" can influence elections. If the FEC were successful in bringing "issue advocacy" within its jurisdiction, incorporated lobbying groups would be completely prohibited from engaging in issue advocacy. Furthermore, individuals who engaged in issue advocacy, but failed to put a disclaimer on their literature or to report the expenditure to the FEC, would be subject to FEC suit and fines.

The federal courts, however, have come to a different conclusion. They understand that the First Amendment, which was designed to protect "indispensable democratic freedoms," protects "issue advocacy" because it involves the "free discussion of the problems of society." Thomas v. Collins, 323 U.S. 516, 529-30 (1945). From the federal court's perspective, the problem is that

the distinction between discussion of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical application. Candidates, especially incumbents, are often intimately tied to public issues involving legislative proposals and governmental actions. Not only do candidates campaign on the basis of their positions on various public issues, but campaigns themselves generate issues of public interest."

Buckley, 424 U.S. at 42.

Thus, rather than limiting issue advocacy because it might influence an election, as advocated by the FEC, the Supreme Court has sought to protect issue advocacy, because it is vital to our representative democracy. To this end, it has developed a "bright-line" test to distinguish issue advocacy from active electioneering.

This "bright-line" test provides that speech is not active electioneering unless there are explicit words "expressly advocating the election or defeat of a clearly identified candidate." Id. at 74-81. As a result, "as long as persons and groups eschew expenditures that in express terms advocate the election or defeat of a clearly identified candidate, they are free to spend as much as they want to promote the candidate and his views." Id. at 45.

Lawrence Noble, general counsel to the FEC, however, views such citizen discussion of public issues "as a major, major breach in the election laws." What Mr. Noble does not understand, however, is that issue-oriented speech is not just C or even mainly C about elections but is about our representative democracy. "Issue advocacy" is vital to our representative democracy.

The benefit of the bright-line "express advocacy" test is that the speaker knows beforehand whether his or her speech is under the FEC's jurisdiction. Without it, anytime a person praises the position of a Congressman on an issue, or criticizes him or her for a vote, the speaker could be viewed as influencing an election and thus as engaging in prohibited political speech. It is, therefore, only afterwards, when the speaker is sued by the FEC, that he or she would know that their speech is regulated. The result is self-censorship of political discourse and a serious loss of speech in the "market place of ideas."

FEC'S ENFORCEMENT ACTIONS AND REGULATORY EFFORTS TO SUPPRESS ISSUE ADVOCACY

This FEC effort to suppress speech by citizens groups has resulted in numerous enforcement actions, with subsequent defeat of the FEC in court. The following is a list of these court cases:

FEC v. FSCME, 471 F. Supp. 315 (D.D.C. 1979).

FEC v. CLITRIM, 616 F.2d 45 (2d Cir. 1980).

FEC v. Machinists Non-Partisan Political League, 655 F.2d 380 (D.C. Cir. 1981).

FEC v. Massachusetts Citizens for Life, 107 S. Ct. 616 (1986).

FEC v. Phillips Publishing, 517 F. Supp. 1308 (D.D.C 1981).

FEC v. NOW, 713 F. Supp. 428 (D.D.C. 1989).

FEC v. Survival Education Fund, 65 F.3d 285 (2nd Cir. 1995).

FEC v. Christian Action Network, 894 F. Supp. 946 (W.D.Va. 1995), aff'd, 92 F.3d 1178 (4th Cir. 1996).

FEC v. GOPAC, 871 F. Supp. 1466, 917 F. Supp. 851 (D.D.C. 1994).

FEC v. Colorado Republican Federal Campaign Committee, 116 S. Ct. 2309 (1996).

These enforcement actions, however, are only the tip of the iceberg since many enforcement actions never progress beyond the administrative level. Such administrative investigations, however, can be equally chilling on free speech. See, e.g., MUR 4203 regarding U.S. Term Limits, attached as Exhibit C.

In addition, the FEC has attempted to buttress its position regulating issue advocacy by extensive regulatory proceedings resulting in the adoption of the following regulations which have been invalidated by courts:

11 CFR 114.4(b)(5) invalidated in Faucher v. FEC, 928 F.2d 468 (1st Cir. 1991).

11 CFR 114.1(e)(2) invalidated in Chamber of Commerce v. FEC, 69 F.3d 600 (D.C.Cir. 1995).

11 CFR 100.22 invalidated in Maine Right to Life Committee v. FEC, 914 F. Supp 8 (D.Me. 1996), aff'd, 98 F.3d 1 (1st Cir. 1996).

11 CFR 114.10 invalidated in Minnesota Citizens Concerned for Life v. FEC, 936 F. Supp. 633 (D. Minn. 1995).

11 CFR 114.4(c)(4) & (5) invalidated in Clifton v. Federal Election Commission, 927 F. Supp. 493 (D.Me. 1996).

PROPOSALS FOR REFORM

In order for Congress to successfully rein in the FEC and prevent further attempted FEC violations of free speech, certain reforms are needed. First, the speech-protecting rules adopted the courts should be incorporated in the Act itself. If this were done, the FEC might actually feel bound by them. Second, certain reforms are needed in the structure and administration of the FEC.

These proposals are as follows.

1. Section 441b of the FECA Should Be amended to Reflect the Protections of Issue Advocacy and of the Political Speech of Not-for-Profit Corporations.

Section 441b of the FECA makes it unlawful for any corporation "to make a contribution or expenditure in connection with any (federal) election." However, the United States Supreme Court in FEC v. MCFL, 479 U.S. 238 (1986), imposed two significant limitations on this prohibition.

First, the Court interpreted ' 441b to be limited to expenditures for "express advocacy." Second, the Court held that the prohibition on corporate expenditures were not applicable to certain not-for-profit corporations. These limitations should be incorporated by Congress in ' 441b by amending it.

After Buckley, Congress amended the FECA to incorporate changes in the statute required by the Court. For instance, Congress amended ' 434(c) to reflect that disclosure of expenditures by organizations that were not political committees were limited to "independent expenditures" and adopted a definition of "independent expenditure" in ' 431(17).

Similarly, Congress should amend ' 441b to provide that it is unlawful for any corporation "to make a contribution or to make an expenditure which expressly advocates the election or defeat of a clearly identified candidate."

In addition, ' 441b should be amended to add a new subsection which provides that the prohibition on a corporation making an expenditure which expressly advocates the election or defeat of a clearly identified candidate does not apply to a not-for-profit membership corporation which (1) does not engage in substantial business activities that are unrelated to the charitable, educational or political activities of the organization, except for the traditional fundraising activities of not-for-profit organizations, (2) has no shareholders or other persons affiliated so as to have a claim on its assets or earnings, and (3) was not established by a business corporation or a labor union and does not receive a substantial portion of its contributions from such entities.

These changes would conform with the Court's decision in MCFL, 479 U.S. 238 (1986), see also Day v. Holahan, 34 F.3d 1356 (8th Cir. 1994); FEC v. Survival Education Fund, Inc., 65 F.3d 285 (2d Cir. 1995), and would signal the willingness of Congress to abide by this important issue advocacy protecting decision. Furthermore, incorporating these changes in the statute will make it readily apparent to all that this provision is narrow on its face; where now one has to read the United States Reports to know about this significant limitation.

2. The Definition of Contribution Should Be Amended to Clarify that It Does Not Apply to Issue Advocacy.

In FEC v. Colorado Republican Federal Campaign Committee, 116 S. Ct. 2309 (1996), the Federal Election Commission sought to regulate and restrict issue advocacy by claiming that issue advocacy becomes a contribution to a candidate C and subject to the contribution limits C if the expenditure for the issue advocacy was coordinated with a candidate. There is no justification for issue advocacy losing its protected status just because it has been communicated to a candidate.

This misguided attempt to circumvent the protection of issue advocacy in Buckley can be prevented by adding to those items listed in ' 431(8)(B) C as not being included in the definition of "contribution" C any expenditure for a communication which does not expressly advocate the election or defeat of a clearly identified candidate."

3. The Definition of Political Committee Should Be Amended to Reflect the Court's Major Purpose Test.

The Court in Buckley held that an organization cannot be considered a "political committee" unless the organization is "under the control of a candidate or the major purpose of the organization is the nomination or election of a candidate." 424 U.S. at 79. Unfortunately, when Congress amended the FECA after Buckley, this limitation was not included.

The effect of Congress's failure to modify the definition of "political committee" (found in ' 431(4)(a) of the FECA) to meet Buckley's requirements has been to encourage the FEC to run amuck trying to impose on issue advocacy groups the requirements imposed on PACs in the FECA. This has had the effect of chilling the legitimate issue-oriented activities of such groups and has imposed substantial costs on them in their efforts to resist such unconstitutional impositions. Congress should make this change now by amending ' 431(4)(a) by adding at the end the following words: "and which is under the control of a candidate or the major purpose of which is the nomination or election of a candidate."

4. Limits on Issue Advocacy for Tax Exempt Groups in the Internal Revenue Code Should Be Eliminated.

The Internal Revenue Code imposes limits on issue advocacy for tax exempt organizations. Specifically, the Internal Revenue Code prohibits groups exempt under ' 501(c)(3) from "participat[ing] in, or interven[ing] in [including the publishing or distributing of statements], any political campaign on behalf of any candidate for public office." Organizations that are exempt under ' 501(c)(4) may engage in political activity but such activity must be "insubstantial" and is subject to a tax under ' 527.

Unfortunately, the Internal Revenue Service has given this provision a very expansive interpretation which clearly encompasses issue advocacy. For instance, in Revenue Ruling 78-248, the IRS interpreted this provision to include voter guides, even though they only contained issue advocacy and did not contain any "express advocacy." As a result, not-for-profit group have been chilled in the exercise of their constitutional right to issue advocacy.

Congress should correct this clear violation of First Amendment speech by bringing this provision into compliance with Buckley. This provision should be amended to read that this exemption is available to ' 501(c)(3) organizations that "do not contribute to any political candidate, political committee, or political party and do not make any expenditures expressly advocating the election or defeat of a clearly identified candidate for political office." Furthermore, Congress should make it clear in the statute that ' 501(c)(4) organizations are not subject to a tax except on any contribution to a political candidate, committee, or party and on any independent expenditure expressly advocating the election or defeat of a clearly identified federal candidate.

5. The FEC Should be Mandated, in its Regulatory Activities, to Observe the Limits Imposed by the First Amendment.

Since the admonitions of the courts have left the FEC unchastened in its regulatory efforts to contain issue advocacy, Congress should mandate that, in its regulatory activities, the FEC should act in a manner that will have the least restrictive effect on the rights of free speech and association protected by the First Amendment. To give this provision some teeth, a reviewing court should be authorized to hold unlawful and set aside any action of the Commission that did not use the least restrictive means available.

6. Reasonable Attorneys Fees Should Be Authorized by Congress if any Provision of the FECA or Action of the FEC Violates Constitutionally Protected Rights.

The provisions of 42 U.S.C. ' 1988, authorizing an award of attorney fees to prevailing private party plaintiffs who are seeking to vindicate constitutional rights, are a substantial deterrent to states violating the guarantees of federal law. While federal law does not generally allow for an award of attorney fees against federal agencies, it is justified in this case for two reasons.

First, the FECA uniquely involves the attempt by government to regulate vital First Amendment rights that are "indispensable democratic freedoms." P"rticularly in light of the efforts by some to pass provisions known to be unconstitutional, a provision that allows an award of attorney fees for a successful effort to strike down a portion of the FEC" is warranted.

Second, the FEC has a sorry history of repeated attempts to unconstitutionally expand its powers to regulate issue advocacy. A significant deterrent to such intransigence, and a justified effort to compensate the victims of it, would be to award attorney fees to those private parties that prevail in FEC enforcement actions or in cases against new FEC regulations.

Finally, in order to serve as a credible restraint upon the FEC, any award of attorney fees to a prevailing victim of an FEC endorsement or regulatory effort should be paid out of the FEC's budget.

6. The Act Should Establish Term Limits for FEC Commissioners, Staff Director, and General Counsel.

Because of the strong institutional bias toward regulating free speech in the FEC, fresh blood is needed at the higher echelons of the Commission. This could be established by providing term limits for the Commissioners, Staff Counsel, and the General Counsel.

CONCLUSION

The FEC is an agency out of control. Instead of carrying out its legitimate administrative role, it has expended considerable resources seeking to restrict, stifle and punish constitutionally protected free speech. Congress has an urgent duty to reorder the priorities of the FEC in order to protect citizens and grassroots organizations from the heavy hand of the censors at the FEC. Until the FEC has demonstrated a proper sensitivity for First Amendment rights, it should not be entrusted with further authority to intrude into the vital workings of our representative democracy.